In a recent conversation with a corporate executive on their digital marketing strategy the subject of the high cost of customer service came up. What caught my attention was the mention of their ‘disposable customer base’.
Back in 2009 I wrote a blog on how large businesses adopting a disposable customers attitude. It seems I might need to revisit what I talked about back then. Here is a recap of what I had to say back then.
Stop The Bleeding
The problem being dealt with by most of Corporate America has to do with the growing costs of customer service.
In large businesses it is nothing to get 500 calls an hour from customers complaining about something..billing, product reliability, sales agreements, or just total dissatisfaction.
The time it takes to deal with customers and the number of people a business has to have on staff to deal with customers issues is a huge cost for large businesses…or any business for that matter.
And how does the company cover that cost?…yep. In raising the price of goods.
Part of the Deal
Businesses are always going to have to deal with customers. Businesses who think highly of their customers will write into their business plan how the customers service portion of the business will be handled.
Unfortunately, large businesses realize they will not be able to satisfy every customer so they place in their business plans the most disturbing part of their business model…..the acceptable percentage of ‘Disposable Customer Base’
Yes, they actually write into their plan an acceptable amount of customers they will not be able to satisfy and will totally write off.
The ‘Disposable Customer Base’ mostly effects the Customer retention levels, or the number of customers they depend on for repeat sales.
Over the years I have seen this percentage as high as 40%…this means that out of 100 customers that buy a product or service 40 of them are expected to not return for a repeat sale due to not being satisfied with the product or service.
So, for every 100 customers they acquire each year they depend on 60 of them to buy from them again.
Naturally, there are going to be the customers that just cannot be satisfied. However, that should not be more than 1%.
Attitude Has to Change
How many times have you been part of the 40 customers who these businesses write Off when there was a solution to your issue?
Could this attitude towards only spending time with customers who do not have a problem be part of why the economy is in the shape it is in today?
I think most of us have been part of this index for a long time.
The problem these large businesses are now realizing is they are losing business and cannot see why.
As part of the conversation I asked what could be done to reduce the disposable customer rate or do away with it all together. I suggest they follow how Small Business handle this situation.
In small business there cannot afford any percentage of disposable customers. For every customer that is gained some attempt should be made to keep them. Statistically, it is much more cost effective to attempt keep a customer than it is to market for a new one.
Now that consumer spending is down big businesses will have to take a page from the small business’ play book and start working on retaining customers instead of throwing them away.
What do small businesses do to retain customers that large businesses will need to adapt?
Large businesses, or corporation, will need to adopt the good ol ‘press the flesh’, ‘eye-to-eye’ contact method of doing business.
Small businesses have been surviving for many years with using a more personal approach to customer service. Now large businesses are going to adapt to that method….but how?
Large businesses are dealing with thousands of customers each day. How would they be able to manage talking one-on-one..or even in small groups, with all of those customers?
With the advanced technology that has developed there are a number of ways to deal with large volumes of customers.
This is part of the change all businesses will have to make. How they do it will be the challenge large businesses will have to face, but they will have to face it or run the risk of going out of business. There are some solutions I see they could make, what do you see would work?
Let me know how I can help.
